Does the Idaho Trade Secrets Act displace our confidentiality/NDA clause, or does a trade-secret claim exist alongside a contract claim?
The Idaho Trade Secrets Act displaces overlapping TORT and restitution claims for trade-secret misappropriation, but expressly leaves CONTRACT remedies untouched. Idaho Code § 48-801(5) defines the protected subject matter: a trade secret is "information, including a formula, pattern, compilation, program, computer program, device, method, technique, or process," that "(a) Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and (b) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy." The same subsection adds that trade secrets so defined "are subject to disclosure by a public agency according to chapter 1, title 74, Idaho Code", which matters when the counterparty is a public body. A confidentiality clause also does double duty under the Act: § 48-801(1) counts "breach or inducement of a breach of a duty to maintain secrecy" among the "[i]mproper means" by which a trade secret can be misappropriated. Basic American, Inc. v. Shatila confirms the operative burden: "In order to prevail in a misappropriation action under the ITSA, the plaintiff must show that a trade secret actually existed." The displacement/preservation split is Idaho Code § 48-806: "Except as provided in subsection (2) of this section, this chapter displaces conflicting tort, restitutionary, and other law of this state providing civil liability remedies for misappropriation of a trade secret," but "[t]his chapter does not affect: (a) Contractual remedies, whether or not based upon misappropriation of a trade secret."
The trap
§ 48-806's contract-remedies carve-out means a confidentiality or non-disclosure clause survives the ITSA's displacement of overlapping tort law even where the underlying information also happens to be a trade secret: the drafter does not lose a breach-of-contract theory just because the same facts could also support (or fail to support) an ITSA misappropriation claim; Basic American itself notes the trial court's decision "was based almost entirely on the misappropriation theory" even though the complaint also pleaded breach of contract, and that framing is a warning as much as a comfort, because the Court went on to say the issue on appeal "is not whether Shatila and IFP breached a contractual duty of confidentiality to Basic, but whether the conduct of appellants amounted to misappropriation of a trade secret under the ITSA", and decided the case on the statute, holding the defendants "liable for misappropriation of Basic's Trade Secret." Do not assume the ITSA's displacement reaches confidentiality obligations over information that is NOT a trade secret under § 48-801(5)'s two-part test: unlike some other states' trade secrets acts, this rule found no Idaho statute expressly saving an UNLIMITED-DURATION confidentiality covenant tied to trade secrets from a reasonableness or durational challenge (contrast Montana's § 8(b)(1)-style saving clause); that specific durational-savings question was searched for and not found answered by any statute read here. Damages under the ITSA are themselves capped in a distinctive way: § 48-803(2) allows exemplary damages "in an amount not exceeding twice any award" of actual-loss/unjust-enrichment/reasonable-royalty damages under subsection (1): a 2x cap, not an open-ended punitive remedy. Subsection (1) is itself conditional: entitlement to damages holds "[e]xcept to the extent that a material and prejudicial change of position prior to acquiring knowledge or reason to know of misappropriation renders a monetary recovery inequitable", which can remove the base and with it the multiplier. And the displacement carve-out has two more branches than the contractual one: § 48-806(2) also leaves untouched "[o]ther civil remedies that are not based upon misappropriation of a trade secret" and criminal remedies. No Idaho appellate decision mentions § 48-806, so the displacement line is drawn from its text alone.
9 authorities
- statuteIdaho Code § 48-801enactment date not established
The words that state the rule
(1) "Improper means" include theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means.
- statuteIdaho Code § 48-801enactment date not established
The words that state the rule
"Trade secret" means information, including a formula, pattern, compilation, program, computer program, device, method, technique, or process, that: (a) Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and (b) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. Trade secrets as defined in this subsection are subject to disclosure by a public agency according to chapter 1, title 74, Idaho Code.
- statuteIdaho Code § 48-806enactment date not established
The words that state the rule
Except as provided in subsection (2) of this section, this chapter displaces conflicting tort, restitutionary, and other law of this state providing civil liability remedies for misappropriation of a trade secret.
- statuteIdaho Code § 48-806enactment date not established
The words that state the rule
This chapter does not affect: (a) Contractual remedies, whether or not based upon misappropriation of a trade secret; or (b) Other civil remedies that are not based upon misappropriation of a trade secret; or (c) Criminal remedies, whether or not based upon misappropriation of a trade secret.
The words that state the rule
In order to prevail in a misappropriation action under the ITSA, the plaintiff must show that a trade secret actually existed.
- statuteIdaho Code § 48-803enactment date not established
The words that state the rule
(1) Except to the extent that a material and prejudicial change of position prior to acquiring knowledge or reason to know of misappropriation renders a monetary recovery inequitable, a complainant is entitled to recover damages for misappropriation. Damages can include both the actual loss caused by misappropriation and the unjust enrichment caused by misappropriation that is not taken into account in computing actual loss. In lieu of damages measured by any other methods, the damages caused by misappropriation may be measured by imposition of liability for a reasonable royalty for a misappropriator’s unauthorized disclosure or use of a trade secret.
- statuteIdaho Code § 48-803enactment date not established
The words that state the rule
If willful and malicious misappropriation exists, the court may award exemplary damages in an amount not exceeding twice any award made under subsection (1) of this section.
The words that state the rule
While Basic’s complaint included claims for both breach of contract and misappropriation of trade secrets under the ITSA, the trial court’s decision was based almost entirely on the misappropriation theory. 3 The issue on appeal is not whether Shatila and IFP breached a contractual duty of confidentiality to Basic, but whether the conduct of appellants amounted to misappropriation of a trade secret under the ITSA.
The words that state the rule
We find that when the facts as found by the trial court are applied to the correct tests under the ITSA, IFP and Shatila are liable for misappropriation of Basic’s Trade Secret.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.